Differentiation

Question 1

what is a differentiation strategy related to sustainability?

Answer 1

ecolabels

Question 2

what are environmental labels

Answer 2

• Any label describing or identifying environment related
characteristics of products or services
• Also referred to as “green label” or “ecolabel”

Question 3

what are the goals of environmental labels

Answer 3

– Mark products or services as environmentally preferable to their counterparts so consumers can make decisions based on the product’s or service’s environmental impact.
– Provide market advantage to environmentally sound goods and services
– Assure consumers products have met strict criteria set by an independent organization

Question 4

what are some common features of labelling programs

Answer 4

1. Participation is voluntary
2. Typically created by governments or independent organizations
3. Structure
   - ->definition of product groups and ecological criteria
   - ->application, approval, and award process
4. License fees, typically annual, corresponding to revenue

Question 5

How can the proliferation of ecolabels benefit poor performers?

Answer 5

1. poor performers can design their own metrics with
   highsounding names, give themselves passing marks, and deceive customers or other stakeholders. Philip Morris USA, for example,
   has a long list of recent honors on their web site.
2. Second, the proliferation confuses many consumers and socially responsible investors so that they reduce the importance they give to the metrics with high validity. For example, The American Forest and Paper Association’s Sustainable Forest Initiative has been criticized as being a weak, industry-backed standard that dilutes more strict certifications.

Question 6

What are two other problems with labels?

Answer 6

1. Increased labeling can shift focus away from certain, often big issues

ex. should organic agriculture encompass soil health or just
provide healthy food?Second, the proliferation confuses many consumers and socially responsible investors so that they reduce the importance they give to the metrics with high validity. For example, The American Forest and Paper Association’s Sustainable Forest Initiative has been criticized as being a weak, industry-backed standard that dilutes more strict certifications

2. Labels preach to the converted — but are limited in what they do for the rest.
   - Labels work (and are often required and regulated) where people are motivated to look for them: consider the plethora of on-pack labels that address nutritional content, allergens, alcohol content, safety, and so on

Question 7

how does sustainability differentiation resonate with consumers?

Answer 7

• “My environment” is more important than “the environment”
• In particular, attention to sustainability is most salient when thinking of products
that go:
– In me
– On me
– Around me

Question 8

What are the three requirements to differentiating successfully?

Answer 8

1. the business must find, or create, a willingness among customers to pay for environmental quality;
2. the business must establish credible information about the environmental attributes of its products; and,
3. its innovation must be defensible against imitation
   by competitors.

Question 9

what issues does sustainability differentiation include?

Answer 9

– Not equally attractive for all products
– To be effective, they require aware, knowledgeable consumers with high WTP
– Competing labeling schema can create confusion
– Susceptible to “greenwashing”